Shell to Decide by Dec on Viability of Brazil BC-10 Block

Oct 19, 2005 (Dow Jones Commodities News via Comtex) By Tim Falconer Of DOW JONES NEWSWIRES -- RIO DE JANEIRO (Dow Jones)

Royal Dutch Shell (RDSB.LN) will decide by December on the commercial viability of its Brazilian BC-10 block, the vice president of exploration and production at Shell's Brazilian unit, John P. Haney, said Tuesday.

The block, which is in the Campos Basin off the coast of Rio de Janeiro, has an estimated 400 million barrels of oil reserves. Shell said in April that it may produce between 60,000 barrels a day and 100,000 b/d of crude from the field as of 2009.

Oil found at the block has a density of between 17 to 24 degrees of API, Haney said. He spoke on the sidelines of a government auction for oil and gas exploration blocks in Rio de Janeiro. Shell is lead operator in the block, with a stake of 35%.

Haney also said that Shell had until the end of 2006 to decide whether to declare its BS-4 block commercially viable. That block, in the Santos Basin off the coast of Sao Paulo state, contains even more heavy crude and lies in very deep water, both of which represent an "enormous challenge," Haney said.

Shell estimates reserves at the BS-4 block at 300 million barrels of crude. It has a 40% stake in the block, and is lead operator.

While heavier crude is more difficult to extract and has a lower market price, recent high oil prices have made the production of Brazilian offshore oil more promising.

Shell so far is the only foreign company with a relevant oil production in Brazil, producing about 40,000 b/d at the Bijupira and Salema oil fields in the Campos Basin, about 140 kilometers off the coast of Macae in Rio de Janeiro state.

Copyright (c) 2005 Dow Jones & Company, Inc.

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